The Inghams Group Ltd (ASX: ING) share price is down 8.08% in morning trade.
Inghams shares closed yesterday trading for $2.97 and are currently at $2.73.
This follows the release of the S&P/ASX 200 Index (ASX: XJO) integrated poultry producer's financial results for the year ending 30 June (FY22).
Inghams share price tumbles on profit hit
- Core poultry sales volume increased 4.2% from FY21
- Statutory earnings before interest, taxes, depreciation and amortisation (EBITDA) of $370.4 million, down 16.6% year on year
- Statutory net profit after tax (NPAT) of $35.1 million, down 57.9% from the prior year
- Final fully franked dividend of 0.5 cents per share, down 94% from FY21.
What else happened during the year?
Inghams reported that significantly lower trading volumes resulted in a 17.5% drop in cash flow from operations, which came in at $372.5 million for the full year.
Meanwhile, costs of sales were up 5.7% during FY22. A big driver of the cost increase was feed, where costs leapt by $45.4 million year on year. Ingredients and transport costs also rose, with supply chain disruptions and Russia's war in Ukraine adding to the woes of COVID-19 related costs. The company said COVID costs peaked in Q3 and have since come down significantly.
With profits taking a hit, the full year dividend comes to 7.0 cents, down 57.6% from FY21, likely pressuring the Inghams share price today.
The company reported making solid progress regarding price increases across all channels and customers, with much of those increases looking to contribute to its FY23 results.
As at 30 June, Inghams had net debt of $267.3 million and leverage of 2.0 times. This at the top end of the company's target range.
What did management say?
Commenting on the results pressuring the Ingham share price today, Inghams CEO Andrew Reeves said:
I am very proud of the resilience and commitment shown by our people and the way they have responded to the numerous challenges we have faced during the year…
We are greatly encouraged by the ongoing recovery taking place across the business, with our farming and plant operations continuing their recovery to normal operating levels, shifts, and product range.
Our core business is in good shape. Our diverse network and market leading integrated operating model provides a strong platform that has helped us navigate the significant disruptions over the past two years and positions us well for the future.
What's next?
Looking ahead, Inghams said its core business was "well-positioned, with its geographically diverse network and integrated operating model underpinning its track record of strong cash generation".
The company expects ongoing price pressures to throw up some headwinds in FY23, but said it was making significant progress on securing price increases to offset the inflationary pressures.
Inghams share price snapshot
The Inghams share price is down 30% over the past 12 months. That compares to a full year loss of 5% posted by the ASX 200.
